Gov't Announces 83 Tril. Won Welfare Packages in One Week

August 17, 2017 08:30l08 17, 2017 16:47

The Moon Jae-in government has decided to pay 100,000 won (US$88) a month per child younger than 5 years beginning in July next year. The basic pension payment of 200,000 won currently given to low-income (lower 70% of income scale) senior citizens older than 65 years will be increased to 250,000 won from April next year.

The additional expenses for these two items will be 13.4 trillion won for children's allowance and 29.5 trillion won for senior citizen pension payments for the next five years between 2018 and 2022.

Given the government announced plans for expanding health insurance coverage on August 9 (30.6 trillion won) and providing welfare support for low-income families (9.5 trillion won) on August 10, the total amount of additional bills the government will have to foot announced for the past week is 83 trillion won.

The government's welfare expansion plans are intended to address the inequality problem and encourage income-driven growth. But questions arise as to whether it can pull it off without hurting fiscal soundness.

For example, the 10 trillion won out of 30.6 trillion won to pay for health insurance coverage expansion won't be included in 178 trillion won the government set aside as part of the plan to implement election pledges. Instead, the government will take the money out of the health insurance premium contributions.